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Letters and Replies: Health Insurance, Tax Credits

Is Health Insurance of “Monumental Importance”?

To the Editor:

I agree with the spirit of Paul J. Beard’s article “ObamaCare v. the Constitution” [TOS, Summer 2011], but Matt Sissel’s refusal to buy a service (health-care insurance) that “he neither needs nor wants” involves a major flaw. No one, young, middle-aged, or old, can predict when a catastrophic illness will strike. Those in our society who develop cancer, a stroke, or a major heart attack could easily be burdened with a medical bill of $50,000, $100,000, or more. Thus, health-care insurance is of monumental importance. The #1 reason for people filing for bankruptcy in America is that they cannot afford to pay their medical bills.

Rade M. Pejic, M.D.Michigan City, Indiana

Paul J. Beard II Replies:

Catastrophic health insurance can be an important purchase if one wishes to insure against financial insolvency. But individuals face countless alternatives in life and must make their own decisions with respect to their personal contexts, resources, and goals. The government has no right and no constitutional authority to force anyone to purchase health insurance of any kind—nor to force anyone to bail out those who go bankrupt due to medical expenses. Individuals morally are and legally should be responsible for themselves.

Paul J. Beard IISacramento, California

Would the Federal Government Permit States to Implement a Tax Credits Program?

To the Editor:

Although I found Michael A. LaFerrara’s proposal in “Toward a Free Market in Education: School Vouchers or Tax Credits?” to be enticing, the article did not explain how such a tax credit program could be implemented by particular states without first being permitted by the federal tax code. Is there already a provision in the code by which a state might provide its citizens a tax-credit plan such as LaFerrara’s? If this plan does require new federal legislation, then activists need suggestions as to how to approach legislators to get something started toward enacting such legislation—a prospect, I suspect, that is as distant as initiating Dr. Bernstein’s proposal (in “The Educational Bonanza in Privatizing Government Schools,” TOS, Winter 2010–2011) to auction off the public schools.

A. James Smith, Jr.Naples, Florida

Mike LaFerrara Replies:

The federal Department of Education states, “The responsibility for K–12 education rests with the states under the [U.S.] Constitution.”1 Consequently, public K–12 education is primarily funded by local and state taxes—91 percent according to the NEA.2 So a well-funded state program would be possible even without federal funding or congressional action.

But there are ways that federal funding could be included. Because education dollars flow from taxpayers through the federal government and then back to the states via myriad programs,3 one possible way would be for state tax agencies simply to ignore the federal income tax outflow from its citizens—and thus avoid any need for federal tax reform—and apportion the inflow of federal dollars according to each taxpayer’s Education Tax Liability and Average Attendance Cost.

That said, federal dollars often flow to the states with “strings” or conditions attached, and such strings might prohibit apportionment of the monies as called for in my plan. In that case, states could seek exemptions from the conditions. If the federal regulatory agencies involved refused to grant exemptions, then state representatives could fight for them through Congress. Meanwhile, states could simply exclude federal dollars from the mix and still implement viable programs.

It is worth noting that a transitional tax-credit program such as mine faces far less-onerous legal obstacles than summary, across-the-board privatization would. For example, New Jersey’s constitution mandates that “The Legislature shall provide for the maintenance and support of a thorough and efficient system of free public schools for the instruction of all the children in the State between the ages of five and eighteen years” (Article VIII, Section 4). My plan would likely pass muster under such mandates, because the public schools would remain adequately funded for any child who would attend them. Dr. Bernstein’s plan to auction off the government schools would ultimately require a constitutional amendment in New Jersey (and likely in other states), a daunting task in and of itself. Until our culture is philosophically advanced enough to support the summary abolition of government schools, a transitional plan structured to work within the existing legal context—and in conjunction with popular support for parental school choice—is our best bet. Such a program can get the ball rolling politically at the state level and, over time, with proven success, contribute to a cultural/political environment more conducive to complete privatization.

It is also worth noting that tax credits or school auctions is not an either-or proposition. The ultimate goal of both proposals is the same. My plan could pave the way for Dr. Bernstein’s: The more success Americans saw in transitioning to private education via the tax-credit program, the more open they would become to the idea of auctioning off government schools.

Finally, I wish to emphasize that advocates of free markets in education should not balk at a plan just because it might encounter legal obstacles. To get from where we are to where we need to be, we will have to change some laws. The question is: Will we embrace a plan that can move us in the right direction?

About Michael A. LaFerrara

Michael A. LaFerrara resides in New Jersey, where he spent his career in the plumbing, building controls, and construction industries. He writes on a wide variety of topics from an Objectivist perspective at his blog, Principled Perspectives.

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